Gold up 9 EURO, it's being bought. Dollar up substantially, knocking $13 of the $US gold price, so it's still hanging in there.

Gary, are seeing this final SPY and Gold run in correlation with a dollar declining into a cycle low or do you think they are fairly unrelated at this point, i.e each just completing their respective cycles?

Gold and silver both had a clean break of their bear flags and it led to nothing.

The dollar is about to run into big resistance in the form of the prior cycle top at 76.50. Not to mention it's starting to get late in the daily cycle. I think a tag of the 200 DMA is probably a stretch for this daily cycle.

"Looks like a clean break of the bull flag for the dollar to me. It should get close to the 200dmva over the next few days."

I continued to think the play was getting into dollar correlated investments on any pullback. Not sure why anyone is messing with the stock market at this stage of the game. 'If' the dollar did form it's 3 year cycle low a few weeks back, the upside in the stock market is very limited.

"And if one believe the 3 year cycle low isn't in, then GOLD is the place to be. "

Two points to consider, both long term considerations.

1. The gold bull is maturing, meaning it is slowly gaining wider attention and audience. It's going to start moving quicker, faster and longer while the dips will be sharper but bought quickly.

2. This has moved from a household/corporate credit crises to a public/sovereign debt crises and pretty much the entire developed world has serious debt and lack of growth problems. So even if the dollar is still a "safe-haven", it could be of little relevance to gold, as the dollar might just be considered the best of a basket of putrid currencies.

Look at how gold reacted and performed in Jan-April 2009 during that final leg down for equities, I expect that type of performance during the next leg of this crises.

can I ask you Poly, how old are you and how long you traded for? You seem to have a very relaxed but accurate sense of the markets which makes me think that you have been trading for quite some time....

Next pivot. <--- This could be dangerous. Everyone should understand their own risk tolerance. I doubt we'll get another flash crash, but even a multi-day sell off to cap the end of QE2 (next week) might be something to consider.

Gold and dollar strength in tandem often happens (at this time last year for instance) although dollar weakness with gold strenght are the most common. However, dollar strength together with strong equities almost never happens. A $ rally almost invariably implies a Sp500 dip. Therefore, when the $ broke up from the bullflag on friday, an alternative would have been to exit any Spy longs before the close.

Looks like a head and shoulder on the 4-hours SP500 futures chart with neckline broken. Target 1275-1280.

"Not sure why anyone is messing with the stock market at this stage of the game. 'If' the dollar did form it's 3 year cycle low a few weeks back, the upside in the stock market is very limited."

I think that was Gary's position until a week or two ago and I don't know what has fundamentally changed. In fact the dollar is coming out of the low so that would seem to strengthen the case for avoiding equities.

Well, the USD tipped its hand today, giving us a right translated Daily Cycle. I sold my pittance of EUO a few minutes ago at 18.00. Now, I'll wait for the dollar to give us a correction and will buy EUO, DUG, and SKF on the dollars Swing Low Reversal.

I think I'll follow the model portfolio into GLD or DGP, but I'm wondering whether GLD is operating in sync with SPY anymore. I'm suspecting that Gold is trading in tandem with USD due to EU concerns. Once the EU announces some resolution to Greece, I wonder whether the USD and Gold will correct together.

Looking at Gold's daily cycle, it needs to top 148.19 on GLD to be rt translated. I guess my tactic will be to wait for the rt trans on GLD, and then buy into a correction (daily cycle low) using the swing reversal there as Gold is getting toward the second half of its cycle, as well. I just don't feel that compelled to be involved here.

You've been telling us for months to stay away from trading the stock market because its dangerous. Now you are trying to trade for a bounce when the dollar is rallying and the chance seems to be much much higher that the end of the bull is near. What is different now than a few months ago that makes the trade attractive?

I meant that a hs formed on the es mini (and the Spx) on the 4-hour chandles chart since 17 of April, target 1280. Seems that the es mini is bouncing from top to bottom in a downward channel, now approaching the bottom of the channel (at around 1308).

I would say the mid cycle point is irrelevant, but should provide plenty of technical resistance. Oversold technical and timing band for a cycle low would be more of a reason why it would hold, but then again, it's just probability.

S&P and a number of indexes already broke the trend line from September 2010 lows. This is the same trend line that the market bounced off of last week.

If it closes at the lows today, i can see a test of 1294-1298 tomorrow. A break below that and i can't see how it won't test the 200 dma at 1240-1250 (also Japan Tsunami lows).

So the initial entry was try to catch a 5% move to the upside, but to potentially take a 6% drawdown first (no stops) and HOPE for a 13% bounce in the summer months with NO QE, i can't see how that can be a good trade.

Perhaps well see a double bottom with hui/xau as with the dollars breakout from it's bull flag I really find it hard to believe it will now roll over. Well probably see another few days of downward pressure on the markets as the dollar heads towards the 200dmva. It's such a clean break I'm surprised Gary is not factoring this into his analysis.

Sold my EUO at 18.0, Been nibbling at GDX, GDXJ, and GLD all day. Holding SPY I bought Friday. IF miners underperform GLD once the SPX rally gets going I will switch to GLD. Miners underperforming now is because SPX is getting killed and doesn't mean much (yet?)

Wanted to get a better sense of your psychology at this moment. Why buy GLD here if $gold might only make a marginal new high? There looks to be only a 6% return if $gold hits $1600 an ounce. Wouldn't it be a wise decision to wait for the A-wave?

Rob L: I will take any trade where I believe the risk/reward is skewed heavily in my favor. So long as it is, I am interested. If there is an A-wave later, great, but it has no bearing on this trade (Except that if a great opportunity is coming you don't want to lose money now and not have it for later, but I am personally not concerned with that. I always have plenty of cash for later and a small loss now will make no difference.)

The setup here is not perfect, you may want to take a small chunk 1-2% and play an OTM at around $149-$151. If we make the high's, which is the proposed setup, it will be good for 300% easily. Don't get excited/greedy hearing 300%, this trade is small because the flip side is a 100% loss.

Playing a deep delta this late in the daily cycle and on the edge of a possible cycle low could get drawn down significantly fairly quickly. Just one idea.

The premiums are as low as you will find, investors are capitulating and are willing to walk away from their nightmare with just the options underlying value, for the most part of course. It is a fantastic time to buy because as the underlying security recovers, you make it back on the option value of course, but you quickly gain intrinsic value that was destroyed during the collapse. You will of course need Gary to find that bottom, although you will quickly join the line of corpses.

Poly,LOL, no need to join the line of corpses. The agq shuffle was enough for me. Thank God it wasn`t agqx!Just getting started in options and really apreciate the input from yourself and the others that contribute selflessly. Thanks again.

For anyone still short SPY or QQQ,Gary had mentioned a gap on SPX. Watching Fast Money today, the high at the gap was 1312.70 and the low today was 1312.80. Hopefully we fill that gap tomorrow then shoot higher.

Added 10% to S&P index fund in my wife's and my company retirement plans as of cob today. Now at 20% equity, 80% cash. The new 10% needs to stay parked for 15 days. Gary's timing case. And, the 2's 10's curve is plus 260 bps; no bear market since the 80's has started with that spread >150 bps. Some other advisories I subscribe to are still bullish, and with 20% exposure this isn't betting the farm...

I know I wsa traveling over the weekend, however stil confused over SPY... was I or was I not supposed to sell at trigger stop loss 132? For this morning set up I followed the model portfolio and trade triggers as listed for the trades.

Since I no longer think we are in a D wave (on gold) (yet) I have returned back to regular 'core' insurance-type position.

I don't have any sort of leveraged speculating long, however. I don't see an entry yet that a) has tight stop and b) tends to confirm we are going up instead of down. Gold is still in a daily triangle congestion so I'd rather let it show me up action than just imagine it *might* happen. Maybe it *IS* a D and just taking a bit longer than expected to resume lower.

Otherwise this week is also gold contract rollover and option expiration. Typically these lead to hits on the downside so the uncertainty continues.

Bob,Not really. A four day rule is used to determine if an intermediate trend has changed. The gold trend still appears to be up. We might get a four day rule and/or a four day corollary at the top next month though and there's a good chance we will see one or both at the intermediate bottom later this summer.

You wrote this morning: "I think we can go about taking our GLD position in one of two ways. We can either wait for the stock market to form another swing low or if one wants to try and pick a turning point the logical level to expect buyers to step in would be if gold can trade down to $1500 today."

Gary, you seemed to do neither one of these and are now reporting (after the market has closed) that you went ahead and took the full position in GLD that you were planning to.

How is a sub supposed to know that you were going to take a full position when neither of your criteria for taking a position were met today?

M,I had to leave to go climbing so I just placed the trade as I went out the door. Keep in mind this is the model portfolio and not my personal portfolio. If one didn't take it today then just take it in the morning. You may even get a better entry if gold pulls back in the morning.

Gary, I agree with the posters who were confused by the stop loss trigger today. While I personally did something different, it seemed pretty clear that the stop loss you recommended on the SMT site was hit today. You did mention taking the stop off in the comments but this wasn't clearly reflected in the "stops and triggers" section. You qualified the stop with an "or" statement making the stop a valid condition. Alternately, you could just make suggestions in the nightly report and forget about the model portfolio.

I just Read tonight report, Its good to see what GARY is watching there ...and with Silver it was something I hadnt thought of. Good to know, thanks ( I did buy AG at $17.05 on May 20..posted here). Also bought MFN @$12.65

Kind of "random" , but I might as well mention that today I bought Pier one (PIR).

I also bought CF. These are not my usual trades, but this market has been different for the past few weeks, sideways , up & down...and I have been trading on my own personal system...strictly using charts, so I havent posted on this blog ( because the trades were not backed by cycle bottoms yet).

It has been working for 2 wks (gains), with 2 day buy & sell positions, but its difficult for those not in front of a p.c. daily , so I havent been posting trades.

Since we are now looking for a trade-able rally, I have posted the above current holdings.

I'm not prepared to say the ABCD pattern is done yet. I still tend to think basic human emotions will drive the pattern. The question is whether the dollar really made a three year cycle low or whether it's still to come later in the fall.

Another point...you said that model portfoilio is not what you actually do in your account...too bad..I surely would love to follow your trades in your account..is you personal portfolio in the premium section?

Regarding cycles, I'm a little hazy on the possibilities for gold here. Are you saying that there are 2 possibilities? The first one being gold makes its final C wave run here over the next 2 weeks while the USD puts in its cycle low and the second one being a zig zag climb up into the fall if the USD will turn over and make a new low?

Do you see silver as toast no matter what option, even if dollar low comes in fall?

Without giving too much away, you mentioned in the report last night about a coil forming and that the break out of those coils are usually a head fake. Do you believe the break to the upside today will be short lived for a couple of day's and head back down? or is your opinion this is one of the few times it will work in our favor?

This is not the forum for options and those can get a bit boffinish, but just wanted to mention that the comments here on the subject do not even begin to scratch the surface on the issue.

Without understanding the options "implied volatility" in the price you are paying you are destined to lose. Paying, say, a big 50% implied volatility (if e.g. historic vol is 30%) means emotions are already elevated and you need a LARGE AMOUNT OF MOVEMENT IN THE UNDERLYING STOCK to make money because if the volatility goes down or stays flat, or if the stock goes down or stays flat, you will lose money. Market-makers happily sell them to you as there are many more ways for you to lose money on them.

A quick calculator is such - if you assume that a stock has an annualized volatility of e.g. 35% how much does it need to move in 1 day, 1 week or 1 month in YOUR DIRECTION to offset the volatility priced into the option? To get that number for any number of trading days, multiply 35% by the square root of the number of days/252. That is, for the range 5 days from now, multiply 35% by the square root of 5/252. So, in 5 days, theoretically 2/3rds of the time, the stock will be between -5% and +5% (0.0493 exact answer).

In-the-money options are nice and lower risk, but the sweet part of the curve is around at-the-money level with delta around 0.5.

Some very smart and experienced people only ever use options to hedge existing exposure. Other profitable ones more often sell options to capture some time erosion / mean-reversion etc, but that's black-belt level.

Hotrod: I am a tape reader from way back. "Pullback" just means a lower price from anywhere. I usually look to see if the pullback is resisted by other hot items or is everything pulling back together. If my item pulls back but other things are firm, I add. I have added more GDX, GLD, and bought a little QQQ this morn ing. I am about where i want to be for this move now. The miners are firm today relative to gold which gave me confidence to add this morning.

If you find yourself really wanting to buy and afraid to pull the trigger reduce the size then do it.

Catbird: I don't really have a firm stop on SPY. My style is hard to describe and depends on whether I change my mind about a rally coming. I am not really thinking about it yet. I do not recommend this approach because most people feel going down is "bearish" and just emotionally sell on weakness. I sometimes have a firm stop (because breaking such-and-such a level is in fact bearish) and I will surely be out if it beaks the 4/18 low of 129.50 or so, but i will probably be out before then. Today is annoying but isn't really telling me anything from what I can see.

We had a 90% down day, a BB crash trade, a weak Monday after OpEx (usually a rally follows), etc. Not to mention Gary's cycle low being due. Lots of evidence for a rally here so I will be somewhat patient.

I'm very stop-conscious because as a less experienced trader I am trying to burn into my brain cells the habit of always placing a stop the moment I take my position. Always. This is just because I'm trying to protect myself from myself.

I will lose out on some profits, but I figure the if I want to form this habit I will have to take action in accordance with the desired habit. So I'm kind of doctrinaire with always having a self-executing stop.

Well, I'm going to step away and pop in at the close. Looks to be a kind of boring day.

Catbird. Good! The very most important trading rule IMO is not to lose too much capital. It's a fine line, though, as you don't want to whipsaw yourself constantly with too-tight stops. It's one of the ways in which Gary;'s cycle trading is helpful. If a previous low is taken out, things have changed and it's adios. Just don;t buy too much at a time and don't add too much at higher prices. Each successive purchase should be smaller than the one before it. Buy a lot when the stop is close to limit losses and then add bits later if you like. I like to start the year conservatively and get bolder as profits are banked.

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